The term “untapped potential” is often bandied about when it comes to Africa, but when we drill down to the reality, the numbers speak for themselves. Africa is home to 54 countries, 1.3 billion people, the world’s second-fastest growing economy, millions of retail outlets and rapid urbanisation—more than 55 African cities have populations of more than 1 million people, 80% of which have mobile subscriptions. These cities are also seeing steep smartphone ownership growth rates.

It all starts with the consumer

The African Development Bank ballparks the continent’s middle class between 60 million (upper middle class, able to spend between $10 and $20 per day) and 420 million (total middle class, able to spend between $2 and $20 per day), depending on which definition of middle class you use. But is the middle class really everything it’s cracked up to be? Is it a mountain or molehill?

In sub-Saharan Africa, Nigeria has the biggest absolute middle class population (able to spend between $2 and $20) at 42 million people, while Ethiopia/Kenya and South Africa’s middle class populations are almost equal, at 21 million and 24 million, respectively. But aside from these select countries, the average middle class population per country in Africa ranges between 1 and 8 million people (i.e., 60 million-420 million split across 54 countries).

In comparison, the middle class populations of China and India are roughly the same in total size and range of potential as Africa’s, but the average incomes between Africa and China are notably different. The average middle class income in Africa is only $4,000 per annum (India is similar), compared with $8,000 in China. Added to the disparity is that in Africa this income is spread far and wide, and Africa’s consumption story will be different from that of other emerging markets.

What’s not to like?

It’s therefore clear that the foundation is there, and there is no debate about the base of opportunity. But within the broader middle class range, it’s important to drill down further and look at Africa’s globally comparative, rising consuming class, defined as those who spend more than $10 per day. Globally, the consuming class represents a massive rising opportunity in emerging markets. In fact, McKinsey forecasts that by 2025, the world’s consuming class will swell to 4.2 billion (53% of the global population) and account for 47% of consumption spending.

In Africa, today’s consuming class includes 120 million people, or 10% of its total population (versus 35% globally), accounting for 31% of income and closer to 40% of spend. However, in the near term, this figure could double as lower middle class incomes ($4-$10 per day) stabilise. In the longer term, the consuming class could expand to 40% to include the mass middle class with fluctuating spending ability between $2 and $4 per day. And in the more distant future, the additional 720 million people who live on incomes of less than $2 per day could rise up.

A matter of mind-set

As part of this reality check, businesses can’t simply focus on income and demographic numbers. They need to understand the diverse and evolving consumer spectrums: how consumers live, shop, buy, interact and experience products, as well as what influences their choices, what they watch, and the impact that technology has on their daily lives.

To look at opportunities in comparative ways, Nielsen created seven consumer categories across 17 countries to identify and understand consumers and how to engage with them. These categories are based on lifestyle, habits, shopping dynamics, purchasing and media drivers.

Keeping it real

Amid the changing consumer landscape, we need to be cognisant of consumer realities and how they translate into opportunities for brands. There is a significant opportunity in Africa to understand that a consumer’s ability to consume doesn’t usually start with the branded product. In that regard, it’s critical to identify a brand’s mandate/role for today and tomorrow, and pinpoint which stage of the need state each business is prepared or able to tap into.

Unfortunately, this is where many new and existing businesses have fallen short, as less than 20% of consumers in Africa are able and willing to purchase branded products. That means the overwhelming majority of consumers are fulfilling their needs outside of the branded format. With an in-depth understanding of consumer needs, businesses will be able to adapt their offerings to match those needs, across a broader spectrum and build equity for the future.

Build a reason and they will buy

Another million-dollar question for businesses is whether to create new propositions for Africa or bring ones in from other emerging markets and hope that Africa’s consumers will buy them. As they ponder this question, brands need to be mindful that success requires more than just bringing another affordable or available product to market. Marketers and manufacturers need to look at the specific day-to-day lives of consumers and identify needs to solve. With deep analysis, brands can identify many unmet needs, whether based on tradition, taste preference, new needs, ease of use, scarcity, accessibility, health and wellness, aspiration or sustainability, or differentiation.

Opportunities across the continent

Potential for growth exists across the continent, whether viewed in absolute or relative terms, among current and future consumers. The key for brands is identifying where to execute based on overall consumer potential and ask these questions to ensure success:

Which part of the consumer needs spectrum does your brand operate, and are there opportunities there to extend purchasing beyond the brand to build future loyalty?

Do you have the right products, and can you adopt, adapt or innovate them to match specific consumer needs?

Can you reach your consumer through tailored marketing and media, and can you optimize your retail execution, distribution and activation in the stores that matter most?